http://www.harpers.org/archive/2008/10/hbc-90003688
Americans Unwilling to Face Reality
By John R. MacArthur
It’s not as though no one saw it coming. Here’s the economist Michael
Hudson, writing in the May 2006 issue of Harper’s Magazine: “The reality
is that, although home ownership may be a wise choice for many people,
this particular real-estate bubble has been carefully engineered to lure
home buyers into circumstances detrimental to their own best interests….
The bubble will burst, and when it does, the people who thought they
would be living the easy life of a landlord will soon find that what
they really signed up for was the hard servitude of debt serfdom.”
Other commentators, including Warren Buffet, said similar things about
the derivatives market. He was prescient, but hardly anybody listened.
Americans, perhaps even more than other people, have difficulty
embracing the concept of “reality.” In part, this is religious. America
remains the land of infinite redemption where any crook can suddenly go
straight. In part, it stems from our turbo-charged ethos of capitalism.
This has always been the land of get-rich-quick and damn the
consequences. We are a nation of fantasists, and things have to get
really bad before a politician has the right to trade in hard truth.
I doubt that, even now, things have gotten bad enough. Even with all the
frenzied commentary about the credit crisis now choking the media (while
the financial geniuses assembled at the corner of Wall and K Streets
scramble to save their hides), I’m struck more by what’s not being said
than what is. Every day I add to a list of critical omissions from the
debate. Where, for example, is the voice of organized labor? In previous
generations, we could have expected to see the president of the AFL-CIO
or the United Auto Workers on the sets of the major talk shows. Apart
from David Brancaccio’s NOW on PBS, I couldn’t find a single TV program
that featured what might be called a “labor leader.”
Where are the alternative candidates for president like Ralph Nader and
Bob Barr? I was pleased to hear that Nader, a long-time critic of the
deregulated economy, was permitted to appear on CNN and The O’Reilly
Factor after the second McCain-Obama debate–but the time for that
appearance should have been before the House passed the bailout bill.
Why is the heavy financial support for Barack Obama and John McCain from
Wall Street off-limits for discussion? It’s unlikely the candidates be
asked about that subject in tonight’s debate—the two parties write the
rules to discourage tough questions—but some impertinent journalist
might speak up. If you can’t get the media-trained Obama to give a
straight answer, why not simply present a graphic contrasting Obama’s
Reno speech supporting the bailout and Nader’s argument against it?
For that matter, in its recent take-down of Alan Greenspan and Clinton
Administration deregulation (including the refusal to regulate
derivatives trading), why didn’t The New York Times mention that former
Clinton Treasury secretaries Robert Rubin and Lawrence Summers are
principal advisers to Obama on the economy? In the same vein, why isn’t
Treasury Secretary Henry Paulson, the former CEO of Goldman Sachs,
challenged on his slow response to the Fannie Mae and Freddie Mac failures?
The only serious critic I’ve found was interviewed in France’s Le Monde:
Columbia finance Prof. Rama Cont argues that six months ago the bailout
of the two mortgage agencies would have cost $100 billion instead of an
eventual $400 billion to $500 billion. Who pocketed the difference,
thanks to Paulson’s “indulgence” of his former colleagues? According to
Cont, it was short sellers at Goldman Sachs and hedge funds.
Meanwhile, where are the deep thinkers who might enlighten us in this
hour of fear, including Karl Marx? Don’t laugh–Marx had much to say
about the so-called “contradictions of capitalism” that bears re-reading
today. Nothing he wrote is perfectly applicable to subprime mortgages
and the derivatives crapshoot. But Marx’s understanding that unfettered
capitalism, while fantastically productive, leads to instability by
concentrating wealth in too few hands—that a
mass-production/mass-consumption society is fundamentally incompatible
with oligarchic control of wealth—is something even Rush Limbaugh could
appreciate.
If Marx is too rich for your blood, at least we might hear from John
Gray, the renegade former adviser to Margaret Thatcher. Gray is today’s
most intelligent critic of globalization and “free trade.” He could
explain to a television audience that a great deal of America’s “real
economy” (as opposed to an economy based on derivatives trading and
shopping at Wal-Mart) has already left the country for cheap-labor
locales such the Pearl River Delta, in China, and the south bank of the
Rio Grande, never to return. And he could describe the destruction
wreaked upon traditional societies that suddenly become host to
outsourced American factories. Youngstown and Utica are hurting, to be
sure, but it’s no picnic either these days for the working class in
Nogales or Dongguan.
Finally, there are the great realist novelists, who often see more
clearly than journalists. So far, my Google searches have not picked up
any excerpts from Zola’s novel Money being read on the nightly news. In
this brilliant chronicle of a speculative stock bubble, launched by a
character named Saccard in 1860s Paris, Zola cuts right to the heart of
America’s boom-and-bust neurosis: “Wasn’t such great and rapid
prosperity the result of the methods for which [Saccard] was now being
blamed? All of this came together. If one accepted the success, one had
to accept the risks. When you overheat a machine, it sometimes explodes.”
---
John R. MacArthur is publisher of Harper’s Magazine and author of the
book You Can’t Be President: The Outrageous Barriers to Democracy in
America. This column originally appeared in the October 15, 2008
Providence Journal.
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